Barrel-Aged Stouts Have Gone From Curiosity to Cult Collectible...

Discussion in 'Beer News & Releases' started by drtth, Dec 5, 2018 at 10:40 PM.

  1. drtth

    drtth Poo-Bah (3,647) Nov 25, 2007 Pennsylvania

    A nice article about BA Stouts, their history, why their costs, etc., and I think it's pretty good and also shows that over time a lot of BAs can collectively get it right at the end of the day. An interesting read (first para only quoted as teaser, link to full article below):

    "It’s officially #stoutseason. For some, that may mean simply shifting gears from session IPAs to darker brews. For others, it entails a crowded calendar of special events celebrating the release of sticky, sludgy, boozy barrel-aged beers. These coveted creations cost double, and sometimes even 10 times the amount of an ordinary stout."
    #1 drtth, Dec 5, 2018 at 10:40 PM
    Last edited: Dec 5, 2018 at 10:50 PM
  2. Lahey

    Lahey Disciple (385) Nov 12, 2016 Michigan

    Not a bad read. I would have liked to see a breakdown of how much a bourbon county costs to make vs MSRP just for shits and gigs, but that's a lot of math he probably didn't have the numbers for.
  3. EvenMoreJesus

    EvenMoreJesus Champion (864) Jun 8, 2017 Pennsylvania
    Premium Trader

    Certainly a thought-producing article. Here are some of mine:

    Boozy, barrel-aged stouts are now a major calling card and revenue driver for breweries across the country. What makes these beers so expensive is, partly, the painstaking process in which they are made. It’s more than that, though. The success of sticker-shock stouts is a result of branding, the economics of scarcity, and a heavy helping of FOMO.

    Barrel-aged beers like Bourbon County are significantly more expensive to create than “normal” stouts or other, non-barrel-aged beers. They often require at least double the amount of raw material, such as grains and hops, and so “costs do add up,” Bill Savage, Goose Island lead brewer, barrel program, says.

    Are they REALLY? Sure, they're more expensive to produce than a session beer, but are they more expensive than a DIPA? Probably not.

    Availability (or lack thereof) is key to these beers’ desirability. “The FiftyFifty Brewing Eclipse beers are stupid expensive for a beer that no one seems to care about anymore,” Dan Lamonaca, owner of Beer Karma bottle shop and tasting counter in Brooklyn, N.Y., says. “I have a case of it from last year that I maybe sold one bottle of. It’s a beer that at one point was probably the vanguard of being a thick, rich, imperial stout, and now it’s a beer that’s run-of-the-mill. People pass it up because it’s no longer a luxury item.”

    Scarcity tastes better. Always has.

    Lamonaca says that people are “spending several hundred dollars on the secondary market. That just doesn’t make sense to me.” There’s also the FOMO element of “drinking something that the average person isn’t going to get their hands on,” Lamonaca says. “Is it better than everything else? Probably. Is it five, six, seven, or eight times better from a value perspective? No way. But you’re going to have something [no one else has], and that’s half of the excitement of it.”

    And then you can congratulate yourself for drinking a beer solely based on how much it costs to obtain. You will be the only one doing that, but, hey, that's something, isn't it?

    “It’s about the people you meet rather than necessarily about the beer,” Savage says. “Enthusiasm for the industry, even though it’s changed and morphed and continues to over the years, I think that’s kind of the cool part.”

    If it was about the people and "the industry", you'd just go to the bar and meet people like normal people do instead of standing in line to meet other disgusting tickers, hoarders, and resellers like yourself.
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  4. Harrison8

    Harrison8 Poo-Bah (2,880) Dec 6, 2015 Missouri
    Premium Trader

    One cost aspect of barrel aged beers I don't see debated often despite mentioning it in the brief in the past, and one aspect I'd like to see stats on, is the cost of space to store aging beer. More in particularly, I'd like to know the cost of aging a beer in say - California - with areas known for high cost of real estate vs. something in a fairly rural town, like say - northern Iowa. How does this cost of real estate impact the cost of the beer?

    Very cool read. Thanks for sharing.
  5. EvenMoreJesus

    EvenMoreJesus Champion (864) Jun 8, 2017 Pennsylvania
    Premium Trader

    Though this would be interesting to see, it would depend upon the size of the barrel program.
    Harrison8 likes this.
  6. Harrison8

    Harrison8 Poo-Bah (2,880) Dec 6, 2015 Missouri
    Premium Trader

    It wouldn't be easy to compute, as there are many influencing problems. It may be possible to distill real estate square footage rental/cost down within areas and compute using barrel program commonalities, i.e. how much would it cost to store 10 barrels, double stacked with a 6 foot walkway? Does it impact the resulting kegs/bottles?

    Not a complete picture, but it would at least offer up some data behind barrel aged costs. Notice I didn't say justifies barrel aged costs.
    bbtkd likes this.
  7. drtth

    drtth Poo-Bah (3,647) Nov 25, 2007 Pennsylvania

    Which DIPA is made in a production environment that requires some months of aging in a $150 first use barrel with a small but real risk of infections in each barrel that could require pouring out of the entire contents of an entire barrel or of many barrels? Also, wouldn't the opportunity costs for that DIPA be less than the opportunity costs for same starting quantity of the Stout?
    #7 drtth, Dec 5, 2018 at 11:50 PM
    Last edited: Dec 5, 2018 at 11:58 PM
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  8. Jaycase

    Jaycase Meyvn (1,213) Jan 13, 2007 Illinois

    Here is an interesting article which was put together for GI Rare back when it was released in 2015. ~68% of its estimated cost breakdown was the box itself!
  9. Lahey

    Lahey Disciple (385) Nov 12, 2016 Michigan

    Sounds about right. Now I want to see a beer review where the reviewer eats the box and does notes on it:grin:
  10. AZBeerDude72

    AZBeerDude72 Meyvn (1,387) Jun 10, 2016 Arizona
    Premium Trader

    Nice read OP, thanks for sharing. :beers:
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  11. bbtkd

    bbtkd Poo-Bah (2,100) Sep 20, 2015 South Dakota
    Premium Trader

    Several things are often missed when folks weigh the cost of a cult BA beer;
    • Missed opportunity in the form of labor and space. If a warehouse contains beer aging in bourbon barrels for nine months or more, and staff have to monitor their progress, think about the lost opportunity to crank out other beers at high volume that cost less to make, sell at higher volumes, and don't require them to sit and be tended to by staff for months on end.
    • Risk - think BCBS 2015 and 2016. In 2015, infection reportedly was caused by an unclean tanker used to transport aged beer to the bottling line. The beer reached consumers across the US and consumers were given a (limited) offer to return it for credit. This had to be expensive - and in reaction, they added pasteurizing which does not fix already infected beer, it only prevents further development - so infection also needs to be caught by testing. There was an unsubstantiated rumor that a huge amount of 2016 BCBS had to be dumped for unknown reasons, hence the shortage that year. So - the profits can be high but have to cover the risk of it not going to plan. After heads reportedly rolled, things went much better in 2017 and 2018.
    • Packaging costs can be higher - as an example BCBS. You can bet that custom bottle and real sharp labeling are not cheap. This seems to be unique to BCBS.
    • Marketing and planning a release that largely happens the same day across the distribution area. Events must be planned, and great pains must be taken to try to allocate the beer where it will sell, and at the same time avoid shafting any market. An impossible task. This is not unique to BA beers.
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  12. JackHorzempa

    JackHorzempa Poo-Bah (3,710) Dec 15, 2005 Pennsylvania

    Another cost consideration is the wastage of dumping x% of the barrels that experienced infection/contamination. The value of x will vary from brewery to brewery but that number is not inconsequential.

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  13. Riff

    Riff Crusader (748) May 12, 2016 Virginia

    Would also be cool to have it from a breakdown on how the barrels are stored and costs associated with the storage beyond just space. So, for example, if the barrels are stored without climate control versus a controlled environment and so on. Went on a tour with a local brewery where the owner mentioned that their storage facility rotated through simulating a years worth of weather in three months to try to mimic the expansion and contraction the barrels would get naturally, while still being in a controlled environment.

    Or maybe it's just the electric geek in me...
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  14. Mute_Ant_Brew

    Mute_Ant_Brew Initiate (57) Mar 28, 2017 Wisconsin

    A DIPA has a problem the stout doesn't when it comes to age. While many beer drinkers will very often cellar these big stouts, and buy multiple to do so, the DIPA has more of a "shelf life" that after a certain point people will be far less likely to purchase it.
    A "shelf aged" imperial stout is far more inviting than a 9 month old DIPA. And the less concerned beer drinker isn't going to pay the inflated cost of a DIPA or an imperial stout. Now the brewery has shelf space that isn't moving and had a fermentor tied up with a beer that isn't yielding the profit they needed to make that worth while.
    drtth likes this.
  15. FatBoyGotSwagger

    FatBoyGotSwagger Meyvn (1,115) Apr 4, 2009 Pennsylvania

    You could say the same about certain sours, people would rather collect them than drink them. This is what the article missed.
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  16. Boomer4ES

    Boomer4ES Disciple (300) Jan 31, 2012 North Carolina

    In your example, either they made more beer than there was demand for, or the liquid wasn't good enough to be as desirable as planned. That's poor brewery operation and is not an inherent cost factor in producing a DIPA. The costs of barrels, time, space, and risk of infection required to produce barrel aged stouts are inherent factors if a brewery wants to produce that style. Apples to oranges . . .
  17. Mute_Ant_Brew

    Mute_Ant_Brew Initiate (57) Mar 28, 2017 Wisconsin

    Fair, the cost of a barrel aged stout (or sour) is more significant up front. My comment is more towards opportunity cost. While the barrel aged product can continue to sell after its intended duration of sale (it didn't live up to the hype/ too much produced), the DIPA has far less chance of continued sale.
    I won't say a DIPA costs more since they don't require barrels or warehousing, but I believe the cost of risk in production is similiar.
  18. drtth

    drtth Poo-Bah (3,647) Nov 25, 2007 Pennsylvania

    Very good point, and fair enough.

    But that still leaves open the question of judging the market and production in my mind. DIPA has a narrower time window for shelf life but does that necessarily balance the slightly unpredictable risk on the production side. I’ve heard it said that pouring, say, as much as 25% of barrel room input isn’t unheard of even for experienced brewers who have learned some barrels are riskier than others, and it can be more or less. If we assume I’m experienced with judging the market for both our stout and our DIPA and have some idea of the risk with barrel infection with the stout I can’t totally eliminate risk ( otherwise it wouldn’t be called risk:slight_smile:). The 2015 GI stout debacle shows that one of the most experienced barrel aging programs in the country. Corporate ownership seems irrelevant. If I’m buying a business because it can fill a big gap in my product line and stabilize my own bottom line there is no way I’m going to tell that unit how to run. (Especially if I’m some one like ABInBev whose business units run each unit themselves using zero based budgeting.)

    I guess my real bottom line is, does any of us individually have enough experience and industy specific knowledge our heads to simple say, “Oh, predictable product A should cost same as slightly un predictable product B.” And to dismiss the question as solved ignores the inherent size of unpredictable risk. As someone once said in some context once said, “There’s many a slip twist cup and lip.” Thanks for sharing your thoughts and experience. I’m one whose here to learn more as an outsider and not easily satisfied by anonymous replies such as “they should be the same.” We all make mistakes so I like reasons as well as some assertions.
    #18 drtth, Dec 6, 2018 at 10:31 AM
    Last edited: Dec 6, 2018 at 10:46 AM
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  19. dennis3951

    dennis3951 Champion (834) Mar 6, 2008 New Jersey

    I wonder how much those bottles of GI Rare were sold for at the wholesale level.
  20. Harrison8

    Harrison8 Poo-Bah (2,880) Dec 6, 2015 Missouri
    Premium Trader

    I agree. It would be very neat to see how decisions in storage impact a pour's price.
  21. Mute_Ant_Brew

    Mute_Ant_Brew Initiate (57) Mar 28, 2017 Wisconsin

    I don't think I ever said they should cost the same. If I came across as abrasively dismissing the subject of the thread and trying to over simplify the answer, I apologize for that.
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  22. drtth

    drtth Poo-Bah (3,647) Nov 25, 2007 Pennsylvania

    No problem at all. Did not take it that way and I was really alluding to the comment made by the person to whom I initially responded. I found your thoughts helpful in learning more and certainly did not intend to be critical of your reply to me. (Sometimes the internet inhibits understanding/communication...)
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  23. Mute_Ant_Brew

    Mute_Ant_Brew Initiate (57) Mar 28, 2017 Wisconsin

    Right on man. I probably read into it too much.
    drtth likes this.
  24. drtth

    drtth Poo-Bah (3,647) Nov 25, 2007 Pennsylvania

    Communication is difficulty enough face-to-face and with visual cues as well as verbal.... :grin:
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  25. EvenMoreJesus

    EvenMoreJesus Champion (864) Jun 8, 2017 Pennsylvania
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    Unless you're a brewery with regional or national distribution, you aren't going to need very much space for a barrel program. Each 55 gallon barrel represents around 23 cases of 12 750s. Small breweries are only going to need a couple barrels to satisfy the local demand for these beers.
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  26. EvenMoreJesus

    EvenMoreJesus Champion (864) Jun 8, 2017 Pennsylvania
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    $150 spread out over around 280 750s of beer isn't that much of an added cost. Especially if you're going to use the barrel more than once, which many breweries do. Floor space in most small, local breweries is the issue, but even that can be overcome so that no additional space is required. Larger programs, however, are probably going to need a separate facility, but unlike sour/brett beers, they don't necessitate them.

    Contamination concerns with clean barrel aging programs are rather overwrought. Do they happen? Sure. Do they happen a lot? Nope. When they do, they're not the barrel's fault.
  27. readyski

    readyski Aspirant (229) Jun 4, 2005 California

    I have to think the biggest cost is labor whether storing or not.
  28. EvenMoreJesus

    EvenMoreJesus Champion (864) Jun 8, 2017 Pennsylvania
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  29. readyski

    readyski Aspirant (229) Jun 4, 2005 California

    I'm no expert in brewing and have done no specific research but in my experience that is the case in most industries
  30. Harrison8

    Harrison8 Poo-Bah (2,880) Dec 6, 2015 Missouri
    Premium Trader

    Regardless, I'm still curious. Breweries like Prairie and Side Project are releasing dozens of barrel aged beer a year, some of which spends 2 or more years in barrels. Each of Prairie's Prairie Dawg monthly releases would require at least one barrel each. Of course, breweries performing lots of barrel aging most likely have a more efficient system than those doing a single annual release. Glancing at Prairie's Instagram feed shows barrels stacked as high as 6, meaning floor space use is minimal despite the large collection of barrel aged beers.

    Discussing regional breweries, New Belgium has a large room dedicated to their foeders, and real estate isn't cheap in Fort Collins, Colorado. Cheap being totally situation, but it's much more expensive than say my hometown - Kansas City, where Boulevard could store barrels at a much lower cost based strictly on real estate costs (perhaps why Parabola was brewed/aged in Missouri instead of California?)

    Then you have breweries aging beer in the back of their tap rooms (can think of two spots here in town doing this). It removes one 4-top table for customers (potential lose of money? I'm not an economist), but doesn't incur the cost of any additional real estate, HVAC, etc.

    I still think it'd be interesting to hear to see how it impacts the cost per pour/bottle, if nothing else, just to either credit or discredit the argument that barrel aged beers rightfully deserve a much higher cost.
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  31. TriggerFingers

    TriggerFingers Disciple (323) Apr 29, 2012 California

    Labor is part of the equation for sure, but ingredients (and barrels) make up a huge part of the difference. It takes a lot more of everything to make a BA stout. Further, storage gets factored in, especially for larger operations. Beer sits in a warehouse for an extended time and just...sits there. Time is money, space is money. Then it needs to be transferred from a lot of smaller vessels (labor), then bottled, and in many cases stored after bottling.

    And in many cases aren't nearly as good.
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  32. EvenMoreJesus

    EvenMoreJesus Champion (864) Jun 8, 2017 Pennsylvania
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    This is where the money goes for these products. The increase cost of ingredients, including barrelage, and labor is rather minimal. Leasing another building to house your barrel program is much more expensive, comparatively.
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  33. EvenMoreJesus

    EvenMoreJesus Champion (864) Jun 8, 2017 Pennsylvania
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    Eh . . . I understand what you're saying, but you're using bad examples. New Belgium is in Bum Fuck Egypt and Boulevard is right outside/in a big city. Both are massive breweries on a lot of real estate and have been there for a long time, so I can't see the additional cost contributing that much to either program.

    Right. Most small breweries have zero expenditures associated with their barrel programs from a real estate perspective, as they can be accommodated rather easily even in a small space because they are small programs.

    After all that, I'd agree. What it really comes down to is that very few barrel aged beers deserve premium pricing even though most of them get it.
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  34. drtth

    drtth Poo-Bah (3,647) Nov 25, 2007 Pennsylvania

    You know a lot, but not everything. They happen more than you let on. Sometimes and unexpectedly as high as 40 to 100%. There are certainly other causes and contamination issues but they have in recent years as costs rise and supplies shrink become a major source of infection.

    Btw, which DIPA was that? That’s all I really wanted to know. Thanks.
  35. Harrison8

    Harrison8 Poo-Bah (2,880) Dec 6, 2015 Missouri
    Premium Trader

    We're on the same page, and I understand real estate role may be small, but I'd still like to see it broken out in some manner. It'd also be interesting to see what breweries like Avery are paying to store barrels vs. Prairie. Two very different cost of living areas, which may also account for a higher priced taster, but that's getting into a different cost area. I'd just like to see real estate compared.

    I understand each situation is different, and don't expect a full chart plotting out cost per barrel stored compared with barrel aging program sizes. It would just be neat to see how much it costs to store a barrel in one area vs. another. Now that I'm saying that out loud, I could always use average real estate square footage, and with a few general, but noted assumptions, compute it myself. Maybe I'll do that tonight.
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  36. EvenMoreJesus

    EvenMoreJesus Champion (864) Jun 8, 2017 Pennsylvania
    Premium Trader

    If your barrel program is running at 40 - 100% contamination, you are a shit brewer. Full stop. Contamination is a fact of life, yes, but if you take the proper precautions, they should be few and far between.

    Also, I'm not being a dick, but could you translate that last sentence for me? I just can't seem to figure out what you're trying to say. Sorry.

    I could give you a list, but I don't think that's necessary. Maybe we could just run the numbers? If we compare the grists for both of these types of beers they are going to be very similar in cost, so let's just say they cancel each other out. Yeast? No difference. Hopping? Many popular DIPAs are using 2 oz. of hops PER GALLON of finished beer. Some outliers even up to 3 oz. Imperial Stouts are using high alpha varietals or hop extract to bitter the beer, with maybe a dash of finishing hops just because. DIPA wins, hands down. Then you have the barrelage. Let's just say that won't eclipse the cost of hops. Additives? OK, now we're getting closer, but I don't think we're even yet.

    At the end of the day, if you want to give brewers extra money for "the risk of infection", that's up to you, just know that it isn't warranted.
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  37. EvenMoreJesus

    EvenMoreJesus Champion (864) Jun 8, 2017 Pennsylvania
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    That'd be swell.
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  38. drtth

    drtth Poo-Bah (3,647) Nov 25, 2007 Pennsylvania

    I didn’t say “running at,” I said it can happen. Even to one of the most experienced barrel programs in the US.

    Barrels price have shot up because of demand from brewers and no real surge yet in the barrel market since increased distillation and aging has a time lag before the empty barrel supply follows.

    Result, barrels that used to be marginal and go to rain barrels, etc. are diverted to barrel aging programs. Result, increased possibility of infection.
  39. beernuts

    beernuts Disciple (324) Jan 23, 2014 Virginia

    So you’re saying some spirit barrels are more likely than others to become infected, and those barrels can be identified by the barrel seller/buyers? In low demand markets, those risky barrels would not be re-used, but now they are re-used more frequently?

    If this is what you are saying, I’m curious how distillers/brewers can identify risky barrels.
  40. LeRose

    LeRose Meyvn (1,333) Nov 24, 2011 Massachusetts

    Good article overall, but I think the last two paragraphs make the valid point, actually one sentence contained therein.

    “If you have the money, why not?” Jackson writes. “People need to get over how things used to be… Brewers spend time and a lot of money to give fans great beer. If the brewery wants to charge $100 for a beer, then do so. It is up to the public if they want to buy or not.”

    For the right barrel-aged stout, Jackson writes, “I’m willing to trade half my cellar.”

    I have my own typically tangled thoughts to share here, but one thing is clear. As long as people are willing to spend the money, the pricing isn't going to come down - we all know that.

    I'm not in the $100 a bottle market myself, but if somebody is more power to them. Not that I couldn't make that kind of purchase, just that I can buy a whole bunch of other beer for the same $100 - maybe that is a weird form of FOMO, not sure. The way I shop, spending a hundred on one bottle would mean I don't buy any beer for a few months. That said, I recently spent $160 on six bottles, two for gifts, the rest for the Christmas table. Having tasted the beers and learned about their origin, we didn't even bat an eye. I'll buy Curieux bombers for $20 all day long because my wife and I share them and each one becomes an occasion from the moment I pull the cork - that experience is not the same as buying the cheaper per ounce six pack and sharing singles using Ye Olde Reliable Harvard Beer bottle opener (THE official opener of the Rose household). To an extent, at least for us, it becomes a matter of perspective and what the overall experience holds - not just the beer in monetary terms.

    That high of a price point ($100, say) sets an expectation, though. For me, it's a lower threshold than $100. I start thinking a $20 bottle better be a damned fine experience, $30 better be sublime. I know I can spend $18 on a little bottle of Coolship Resurgam knowing that I am going to savor and thoroughly enjoy every last drop. I don't know if I have a superlative for expectations surrounding a hundred dollar bottle! Thanks to tasting opportunities and BA, I've seldom been let down, but it happens and time marches on.

    In a related experience, I did a guided tasting at Robert Mondavi. We were given glasses of the same wine, same vintage, but differently priced wines and told to put them in order from "worst to best". Now, worst was still pretty damned good, and best was incredible. The ends of the spectrum were easy - everyone got those correct. The middle was a muddle. The prices on the bottles ranged from $10 to $500, and there was an obvious difference even to a non-wine drinker like me. Anybody saying they "liked" the ten buck bottle "better" was lying to bust people's chops, if you ask me. The high priced bottles transcended being fermented grape juice - I know how the juice is made, there's zero magic involved. Knowing what to do with these particular grapes harvested at this specific time, from this specific plot of land, picked at this specific temperature, handled in this specific manner and blended gracefully - that's the magic - seeing the potential before it is ever realized.

    Based on beers I have tasted specifically in the barrel aged stout genre, I think the same holds true at least to an extent. (It has to be true for liquor - look at what rare Scotch and Bourbon command at auctions). I'm not saying that as a justification, mind you. But there is an observable difference between a brewer who knows what they are doing and somebody who just slaps a stout in a rotgut bourbon barrel and calls it a day. We're not paying only for the mundane ingredients it takes to produce the liquid. We're paying for the skill and art it takes to produce a truly high quality beer that results from a well-managed program, in my opinion. I'd say the same is true for any beer - the truly magical ones go beyond the simple processing and assembling of ingredients. How much that is worth - beats the hell outta me - no clue. Again, not trying to justify anything, just stating my thoughts. To paraphrase Triple-H (for you wrestling fans), sometimes something is just that damned good, and worth every penny spent.